BLUEGREEN VACATIONS HOLDING A The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the Company's unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 , including the Company's audited consolidated financial statements and related notes contained therein. Except as otherwise noted or where the context requires otherwise, references in this Quarterly Report on Form 10-Q to "the Company," "we," "us" and "our" refer toBluegreen Vacations Holding Corporation , together with its consolidated subsidiaries, including Bluegreen Vacations Corporation and its consolidated subsidiaries ("Bluegreen"). References to "BVH" or the "Parent company" refer toBluegreen Vacations Holding Corporation at its parent company only level. Cautionary Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements include all statements that do not relate strictly to historical or current facts and can be identified by the use of words such as "anticipates," "estimates," "expects," "intends," "plans," "believes," "projects," "predicts," "seeks," "will," "should," "would," "may," "could," "outlook," "potential," and similar expressions or words and phrases of similar import. Forward-looking statements include, among others, statements relating to the Company's future financial performance, business prospects and strategy, anticipated financial position, liquidity and capital needs, including conditions surrounding, and the impact of, the Coronavirus Disease of 2019 ("COVID-19") pandemic, and other matters. These statements are based on management's current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Actual results may differ materially from those expressed in, or implied by, the forward-looking statements as a result of various factors, including, among others, the following: ?BVH has limited sources of cash and is dependent upon dividends from Bluegreen to fund its costs of operations; ?risks associated with the Company's indebtedness, including that the Company will be required to utilize cash flow to service its indebtedness, that indebtedness may make the Company more vulnerable to economic downturns, and that indebtedness may subject the Company to covenants and restrictions on its operations and activities and the payment of dividends; ?risks associated with the adverse impact of economic conditions, including the impact of the COVID-19 pandemic, supply chain constraints, labor shortages and inflationary trends on the Company's operations and results, the price and liquidity of the Company's Class A Common Stock and Class B Common Stock, and the Company's ability to obtain additional capital, including the risk that if the Company needs or otherwise believes it is advisable to issue debt or equity securities or to incur indebtedness in order to fund the Company's operations or investments, it may not be able to issue any such securities or obtain such indebtedness on favorable terms, or at all, and any issuance could result in the dilution of the interest of the Company's shareholders; ?the availability of financing, the Company's ability to sell, securitize or borrow against its VOI notes receivable on acceptable terms, and the Company's ability to successfully increase its credit facility capacity or enter into capital market transactions or other alternatives to provide for sufficient available cash for a sustained period of time; ?the Company may not be successful in converting its pipeline of vacation packages into sales of vacation ownership interests ("VOIs") at rates consistent with or exceeding historical levels; ?risks associated with adverse conditions in the stock market, the public debt market, and other capital markets and the impact of such conditions on the Company, as well as risks associated with any failure by the Company to maintain compliance with the listing requirements of theNew York Stock Exchange (the "NYSE"), which include, among other things, a minimum average closing price, share volume, and market capitalization;
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?risks related to potential business expansion or other strategic opportunities, including that they may involve significant costs and the incurrence of significant indebtedness and may not be successful and that the Company's efforts and expenses, including those aimed at enhancing the experience of Bluegreen Vacation Club Members, may be greater than anticipated and may not result in the benefits anticipated; ?risks relating to public health issues, including in particular the COVID-19 pandemic and the effects of the pandemic, including that while conditions have improved, Bluegreen's business was adversely impacted by the pandemic and any resurgence may have similar or worse effects, and the pandemic may continue to have adverse effects, including due to changes in consumer behavior and preferences, and potential future increases in default and delinquency rates; ?adverse changes to, expirations or terminations of, or interruptions in, and other risks relating to the Company's business and strategic relationships, management contracts, exchange networks or other strategic marketing alliances, and the risk that the Company's business relationship withBass Pro under the revised terms of the parties' marketing agreement and its relationship with Choice Hotels may not be as profitable as anticipated, or at all, or otherwise not result in the benefits anticipated; ?the risks of the real estate market and the risks associated with real estate development, including a decline in real estate values and a deterioration of other conditions relating to the real estate market and real estate development, and the risks associated with the Company's ability to maintain adequate, sufficient or desired amounts of VOI inventory for sale; ?risks associated with the Company's ability to comply with applicable regulations, and the costs of compliance efforts or a failure to comply, including risks associated with the Company's ability to maintain the integrity of internal or customer data, the failure of which could result in damage to its reputation and/or subject the Company to costs, fines or lawsuits; ?risks associated with adverse trends or disruptions in economic conditions generally or in the vacation ownership, vacation rental and travel industries, the Company's ability to compete effectively in the highly competitive vacation ownership industry and against hotel and other hospitality and lodging alternatives and decreased demand from prospective purchasers of VOIs; ?risks associated with the Company's customers' compliance with their payment obligations under financing provided by the Company, the increased presence and efforts of "timeshare-exit" firms and the success of actions which the Company has taken or may take in connection therewith, and the impact of defaults on its operating results and liquidity position; ?risks associated with the ratings of third-party rating agencies, including the impact of any downgrade on the Company's ability to obtain, renew or extend credit facilities, or otherwise raise funds; ?changes in the Company's business model and marketing efforts, plans or strategies, which may cause marketing expenses to increase or adversely impact its operating results and financial condition, and such expenses as well as the Company's investments, including investments in new and expanded sales offices, and other sales and marketing initiatives, including screening methods and data driven analysis, may not achieve the desired results; ?technology and other changes and factors which may impact the Company's telemarketing efforts, including new cell phone technologies that identify or block marketing vendor calls; ?risks associated with the Company's relationships with third-party developers, including that third-party developers who provide VOIs to be sold by the Company pursuant to fee-based services or just-in-time arrangements may not provide VOIs when planned and that may not fulfill their obligations to the Company or to the homeowners associations that maintain the resorts they developed; ?risks associated with legal proceedings and regulatory proceedings, examinations or audits of the Company's operations, including claims of noncompliance with applicable regulations or for development related defects, and the impact they may have on the Company's financial condition and operating results; ?risks associated with audits of the Company or its subsidiaries' tax returns, including that they may result in the imposition of additional taxes; ?environmental liabilities, including claims with respect to mold or hazardous or toxic substances, and their impact on the Company's financial condition and operating results;
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?risks that natural disasters, including hurricanes, earthquakes, fires, floods and windstorms, and other acts of God and conditions beyond the control of the Company may adversely impact the Company's financial condition and operating results, including due to any damage to physical assets or interruption of access to physical assets or operations resulting therefrom, and the frequency or severity of natural disasters may increase due to climate change or other factors; ?risks of cybersecurity threats, including the potential misappropriation of assets or confidential information, corruption of data or operational disruptions; ?the updating of, and developments with respect to, technology, including the cost involved in updating technology and the impact that any failure to keep pace with developments in technology could have on the Company's operations or competitive position, and the Company's information technology expenditures may not result in the expected benefits; ?the Company may not pay dividends in the future when or in the amount expected, or at all; ?the impact on the Company's consolidated financial statements and internal control over financial reporting of the adoption of new accounting standards; and ?the preparation of financial statements in accordance withU.S. generally accepted accounting principles ("GAAP") involves making estimates, judgments and assumptions, and any changes in estimates, judgments and assumptions used could have a material adverse impact on the financial condition and operating results of the Company. Reference is also made to the other risks and uncertainties described in the reports filed with theSEC by the Company, including, without limitation, those discussed in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 . The foregoing factors are not exclusive. Non-GAAP Financial Measures This Quarterly Report on Form 10-Q includes discussions of terms that are not recognized terms under GAAP, and financial measures that are not calculated in accordance with GAAP, including system-wide sales of VOIs, guest tours, sale to tour conversion ratio, average sales volume per guest, EBITDA, Segment Adjusted EBITDA, and Adjusted EBITDA Attributable to Shareholders. For a discussion of EBITDA, Adjusted EBITDA, and EBTIDA Attributable to Shareholders, see "Key Business and Financial Metrics Used by Management" below. In addition, see "Reportable Segments Results of Operations" below for a reconciliation of Adjusted EBITDA to net income and system-wide sales of VOIs to gross sales of VOIs. See also "Key Business and Financial Metrics used by Management" in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of the Company's Annual Report on Form10-K for the year endedDecember 31, 2021 . Critical Accounting Policies and Estimates For a discussion of critical accounting policies, see "Significant Accounting Policies" in the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 . New Accounting Pronouncements See Note 2 to the Company's unaudited consolidated financial statements included in Item 1 of this report for a discussion of new accounting pronouncements applicable to the Company. Company Overview The Company is a leading vacation ownership company that markets and sells VOIs and manages resorts in popular leisure and urban destinations. As ofJune 30, 2022 , the Company had total consolidated assets of approximately$1.3 billion and equity of approximately$312.5 million .
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Summary of Consolidated Results of Operations Consolidated Results The following summarizes key financial highlights for the three and six months endedJune 30, 2022 compared to the three and six months endedJune 30, 2021 : ?Total consolidated revenues of$235.6 million for the three months endedJune 30, 2022 , a 22% increase compared to$193.5 million in the three months endedJune 30, 2021 . Total consolidated revenues of$430.6 million for the six months endedJune 30, 2022 , a 27% increase compared to$339.7 million in the six months endedJune 30, 2021 . ?Income before income taxes from continuing operations of$28.0 million for the three months endedJune 30, 2022 compared to income of$31.6 million during the three months endedJune 30, 2021 . Income before income taxes from continuing operations of$53.4 million for the six months endedJune 30, 2022 compared to$38.3 million during the six months endedJune 30, 2021 . ?Net income attributable to shareholders of$17.8 million for the three months endedJune 30, 2022 compared to$19.5 million during the three months endedJune 30, 2021 . Net income attributable to shareholders of$33.8 million for the six months endedJune 30, 2022 compared to$22.5 million during the six months endedJune 30, 2021 . ?Diluted earnings per share from continuing operations of$0.87 for the three months endedJune 30, 2022 compared to$0.93 during the three months endedJune 30, 2021 . Diluted earnings per share from continuing operations of$1.63 for the six months endedJune 30, 2022 compared to$1.12 during the six months endedJune 30, 2021 . The Company's results for the three and six months endedJune 30, 2022 compared to the three and six months endedJune 30, 2021 were significantly impacted by the timing of, and the Company's response to the COVID-19 pandemic. Specifically, the Company experienced: ?An increase in revenues attributable to improved conditions and performance in the 2022 periods. ?Lower gross profit margin from sales of VOIs in the 2022 periods as a result of higher cost of VOIs partially offset by a decrease in the provision for loan losses as a percentage of sales during the 2022 periods. ?An increase in selling, general and administrative expenses both in total dollars and as percentage of system-wide sales of VOIs attributable to the continued expansion of our sales and marketing operations, an increase in the number of guest tours, and a higher proportion of system-wide sales of VOIs to new customers, which have a higher marketing cost compared to VOI sales to existing owner. Segment Results The Company reports the results of its business activities through the following reportable segments: Sales of VOIs and Financing; andResort Operations and Club Management. ? 30
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Information regarding income before income taxes by reportable segment is set
forth in the table below:
For the Three Months Ended For the Six Months Ended
?June 30, ?June 30,
2022 2021 2022 2021(in thousands) Sales of VOIs and financing$ 35,703 $ 36,890 $ 69,791 $ 56,621 Resort operations and club management 20,739 18,834 41,106 36,864 Bluegreen corporate and other (26,266) (21,742) (53,371) (50,288) BVH corporate (2,169) (2,409) (4,122) (4,931) Income before income taxes from continuing operations 28,007 31,573 53,404 38,266 Provision for income taxes (6,171) (7,694) (12,361) (8,883) Net income 21,836 23,879 41,043 29,383 Less: Net income attributable to noncontrolling interest 4,052 4,378 7,272 6,908 Net income attributable to shareholders$ 17,784 $ 19,501 $ 33,771 $ 22,475 Executive Overview Bluegreen is a leading vacation ownership company that markets and sells VOIs and manages resorts in popular leisure and urban destinations. As ofJune 30, 2022 , Bluegreen's resort network includes 45Club Resorts (resorts in which owners in itsVacation Club have the right to use most of the units in connection with their VOI ownership) and 23Club Associate Resorts (resorts in which owners in itsVacation Club have the right to use a limited number of units in connection with their VOI ownership).These Club Resorts andClub Associate Resorts are primarily located in high-volume, "drive-to" vacation locations, includingOrlando ,Las Vegas , theSmoky Mountains ,Myrtle Beach ,Charleston , Branson area, andNew Orleans , among others. Through Bluegreen's points-based system, the approximately 217,000 owners inBluegreen's Vacation Club have the flexibility to stay at units available at any of Bluegreen's resorts and have access to over 11,200 other hotels and resorts through partnerships and exchange networks. Bluegreen's sales and marketing platform is supported by marketing relationships with nationally-recognized consumer brands, such asBass Pro and Choice Hotels. The Company believes these marketing relationships drive sales within its core demographic. COVID-19 Pandemic The COVID-19 pandemic has caused significant disruptions in international andU.S. economies and markets, and has had an unprecedented impact on the travel and hospitality industries. We believe that the increase in sales of VOIs in the second quarter of 2022 reflect the high demand for domestic travel despite continued COVID-19 cases, higher interest rates and inflationary trends during the period. While we hope that current conditions in the travel and leisure industry continue, the future impact of any changes in economic conditions and the pandemic on the Company's future revenue, net income and operating results is uncertain. 31
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VOI Sales and Financing Bluegreen's primary business is the marketing and sale of deeded VOIs, developed either internally or by third parties. Customers who purchase these VOIs receive an allotment of points, which can be redeemed for stays at one of Bluegreen's resorts or at 11,200 other hotels and resorts available through partnerships and exchange networks. Bluegreen's goal is to employ a flexible model with a mix of sales of owned, acquired or developed VOIs and sales of VOIs on behalf of third-party developers, as determined by management to be appropriate from time to time based on market and economic conditions, available cash, and other factors. Bluegreen believes that its relationships with third-party developers enables it to generate fees from the sale and marketing of their VOIs without incurring the significant upfront capital investment generally associated with resort acquisition or development. However, sales of Bluegreen owned inventory typically result in a greater contribution to EBITDA and Adjusted EBITDA, while fee-based sales typically do not require an initial investment or involve development financing risk. Both Bluegreen owned VOI sales and fee-based VOI sales result in recurring, incremental and long-term fee streams by adding owners to theBluegreen Vacation Club and new resort management contracts. Fee-based sales of VOIs comprised 14% and 33% of Bluegreen's system-wide sales of VOIs during the three months endedJune 30, 2022 and 2021, respectively, and 18% and 34% of Bluegreen's system-wide sales of VOIs during the six months endedJune 30, 2022 and 2021, respectively. Bluegreen intends to remain flexible with respect to its sales of the different categories of its VOI inventory in the future based on economic conditions, business initiatives and other considerations. In conjunction with sales of VOIs, the Company also generates interest income by providing financing to qualified purchasers. Collateralized by the underlying VOIs, Bluegreen's loans are generally structured as 10-year, fully-amortizing loans with a fixed interest rate ranging from approximately 12% to 18% per annum. As ofJune 30, 2022 , the weighted-average interest rate on Bluegreen's VOI notes receivable was 15.3%. In addition, the Company earns fees for various other services it provides, including title and escrow services in connection with the closing of VOI sales, and mortgage servicing. Resort Operations and Club Management Bluegreen enters into management agreements with the HOAs that maintain most of the resorts inBluegreen's Vacation Club and earns fees for providing management services to those HOAs and the approximately 217,000Vacation Club owners. These resort management services include providing or overseeing front desk operations, housekeeping services, maintenance, and certain accounting and administration functions. Bluegreen's management contracts generally yield recurring cash flows and do not have the traditional risks associated with hotel management contracts that are generally linked to daily rate or occupancy. Bluegreen's management contracts are typically structured as "cost-plus," with an initial term of three years and automatic one year renewals. In connection with the management services provided to theBluegreen Vacation Club , Bluegreen manages the reservation system and provides owner, billing and collection services. Key Business and Financial Metrics Used by Management Management uses several key business and financial metrics that are specific to or typically utilized in the vacation ownership industry. EBITDA, Adjusted EBITDA, Adjusted EBITDA Attributable to Shareholders are discussed below. For a discussion of the other metrics, see "Key Business and Financial Metrics Used by Management" in the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 . EBITDA, Adjusted EBITDA, and Adjusted EBITDA Attributable to ShareholdersThe Company defines EBITDA as earnings, or net income, before taking into account income taxes, interest income (excluding interest earned on VOI notes receivable), interest expense (excluding interest expense incurred on debt secured by VOI notes receivable), and depreciation and amortization. The Company defines Adjusted EBITDA as EBITDA, adjusted to exclude amounts of loss (gain) on assets held for sale, share-based compensation expense, and items that the Company believes are not representative of ongoing operating results. Adjusted EBITDA Attributable to Shareholders is Adjusted EBITDA excluding amounts attributable to the non-controlling interest inBluegreen/Big Cedar Vacations (in which Bluegreen owns a 51% interest). For purposes of the calculation of EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Shareholders, no adjustments were made for interest income earned on VOI notes receivable or the interest expense incurred on debt that is secured by such notes receivable because they are both considered to be part of the ordinary operations of the Company's business.
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The Company considers EBITDA, Adjusted EBITDA, and Adjusted EBITDA Attributable to Shareholders to be indicators of operating performance, and they are used by the Company to measure its ability to service debt, fund capital expenditures and expand its business. EBITDA and Adjusted EBITDA are also used by companies, lenders, investors and others because they exclude certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company's capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Shareholders also exclude depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Shareholders are not recognized terms under GAAP and should not be considered as an alternative to net income or any other measure of financial performance or liquidity, including cash flow, derived in accordance with GAAP, or to any other method or analyzing results as reported under GAAP. The limitations of using EBITDA, Adjusted EBITDA or Adjusted EBITDA Attributable to Shareholders as an analytical tool include, without limitation, that EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Shareholders do not reflect: (i) changes in, or cash requirements for, working capital needs; (ii) interest expense, or the cash requirements necessary to service interest or principal payments on indebtedness (other than as noted above); (iii) tax expense or the cash requirements to pay taxes; (iv) historical cash expenditures or future requirements for capital expenditures or contractual commitments; or (v) the effect on earnings or changes resulting from matters that the Company does not believe to be indicative of future operations or performance. Further, although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often have to be replaced in the future, and EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Shareholders do not reflect any cash that may be required for such replacements. In addition, the Company's definition of Adjusted EBITDA or Adjusted EBITDA Attributable to Shareholders may not be comparable to definitions of Adjusted EBITDA, Adjusted EBITDA Attributable to Shareholders or other similarly titled measures used by other companies. Reportable Segments Results of Operations Adjusted EBITDA Attributable to Shareholders for the three and six months endedJune 30, 2022 and 2021: The Company considers Segment Adjusted EBITDA in connection with its evaluation of its business segments as described in Note 14: Segment Reporting to the Company's unaudited consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q. See above for a discussion of the definition of Adjusted EBITDA and related measures, how management uses it to manage its business and material limitations on its usefulness. The following tables set forth Segment Adjusted EBITDA, Adjusted EBITDA, Adjusted EBITDA Attributable to Shareholders, EBITDA and a reconciliation of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Attributable to Shareholders to net income, the most comparable GAAP financial measure: For the Three Months For the Six Months Ended Ended March 31, March 31, 2022 2021 2022 2021 (in thousands) Adjusted EBITDA - sales of VOIs and financing$ 37,368 $ 38,320 $ 73,105 $ 59,456 Adjusted EBITDA - resort operations and club management 20,920 19,034 41,470 37,259 Total Segment Adjusted EBITDA 58,288 57,354 114,575 96,715 Less: Bluegreen's Corporate and other (18,922) (16,282) (40,419) (38,896) Less: BVH Corporate and other (575) (563) (1,047) (1,352) Adjusted EBITDA 38,791 40,509 73,109 56,467 Less: Adjusted EBITDA attributable to non-controlling interest (4,115) (4,782) (7,385) (8,029) Total Adjusted EBITDA attributable to shareholders$ 34,676 $ 35,727 $ 65,724 $ 48,438 33
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For the Three Months Ended For the Six Months Ended
?June 30, ?June 30,
2022 2021 2022 2021
(in thousands)
Net income attributable to
shareholders $ 17,784 $ 19,501 $ 33,771 $ 22,475
Net income attributable to
the non-controlling interest
in Bluegreen/Big Cedar Vacations 4,052 4,378 7,272 6,908
Net Income 21,836 23,879 41,043 29,383
Add: Depreciation and amortization 3,852 3,885 7,773 7,736
Less: Interest income (other than
interest earned on
VOI notes receivable) (132) (57) (195) (190)
Add: Interest expense - corporate and
other 6,241 4,969 10,603 10,541
Add: Provision for income taxes 6,171 7,694 12,361 8,883
EBITDA 37,968 40,370 71,585 56,353
Add: Share-based compensation
expense(1) 817 152 1,562 152
Gain on assets held for sale 6 (13) (38) (38)
Adjusted EBITDA 38,791 40,509 73,109 56,467
Adjusted EBITDA attributable to the
non-controlling interest (4,115) (4,782) (7,385) (8,029)
Adjusted EBITDA attributable to
shareholders $ 34,676 $ 35,727 $
65,724
(1)Share-based compensation expense for the three and six months endedJune 30, 2022 consisted of$0.8 million and$1.6 million , respectively, related to restricted stock awards granted inJune 2021 andJanuary 2022 . The following table reconciles system-wide sales of VOIs to gross sales of VOIs, the most comparable GAAP financial measure. For the Three Months For the Six Months Ended Ended June 30, June 30, (in thousands) 2022 2021 2022 2021 Gross sales of VOIs$ 170,787 $ 110,300 $ 286,395 $ 178,550 Add: Fee-Based sales 27,760 53,142 63,697 91,939 System-wide sales of VOIs$ 198,547 $ 163,442 $ 350,092 $ 270,489 ? 34
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For the three and six months endedJune 30, 2022 compared to the three and six months endedJune 30, 2021 Sales of VOIs and Financing For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 % of % of % of % of System-wide sales System-wide sales System-wide sales System-wide sales Amount of VOIs (5) Amount of VOIs (5) Amount of VOIs (5) Amount of VOIs (5) (in thousands) Bluegreen owned VOI sales(1)$ 170,787 86$ 110,300 67$ 286,395 82$ 178,550 66 Fee-Based VOI sales 27,760 14 53,142 33 63,697 18 91,939 34 System-wide sales of VOIs 198,547 100 163,442 100 350,092 100 270,489 100 Less: Fee-Based sales (27,760) (14) (53,142) (33) (63,697) (18) (91,939) (34) Gross sales of VOIs 170,787 86 110,300 67 286,395 82 178,550 66 Provision for loan losses (2) (26,526) (16) (18,488) (17) (43,105) (15) (30,807) (17) Sales of VOIs 144,261 73 91,812 56 243,290 69 147,743 55 Cost of VOIs sold (3) (18,221) (13) (7,024) (8) (30,063) (12) (12,193) (8) Gross profit (3) 126,040 87 84,788 92 213,227 88 135,550 92 Fee-Based sales commission revenue (4) 18,850 68 35,618 67 42,934 67 61,336 67 Financing revenue, net of financing expense 19,259 10 15,799 10 37,998 11 30,922 11 Other expense (358) 0 - 0 (510) 0 - 0 Other fee-based services, title operations and other, net 2,467 1 2,079 1 4,598 1 3,634 1 Net carrying cost of VOI inventory (4,013) (2) (6,118) (4) (8,067) (2) (13,891) (5) Selling and marketing expenses (112,571) (57) (87,130) (53) (196,457) (56) (145,131) (54) General and administrative (13,971) (7) (8,146) (5) (23,932) (7) (15,799) (6) expenses - sales and marketing Operating profit - sales of VOIs and financing 35,703 18% 36,890 23% 69,791 20% 56,621 21% Add: Depreciation and amortization 1,665 1,430 3,314 2,835 Adjusted EBITDA - sales of VOIs and financing$ 37,368 $ 38,320 $ 73,105 $ 59,456 35
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(1)Bluegreen owned VOI sales represent sales of VOIs acquired or developed by Bluegreen. (2)Percentages for provision for loan losses are calculated as a percentage of gross sales of VOIs, which excludes Fee-Based sales (and not as a percentage of system-wide sales of VOIs). (3)Percentages for costs of VOIs sold and gross profit are calculated as a percentage of sales of VOIs (and not as a percentage of system-wide sales of VOIs). (4)Percentages for Fee-Based sales commission revenue are calculated as a percentage of Fee-Based sales (and not as a percentage of system-wide sales of VOIs). (5)Represents the applicable line item, calculated as a percentage of system-wide sales of VOIs unless otherwise indicated in the above footnotes. System-wide sales of VOIs. System-wide sales of VOIs were$198.5 million and$163.4 million during the three months endedJune 30, 2022 and 2021, respectively, and$350.1 million and$270.5 million during the six months endedJune 30, 2022 and 2021, respectively. System-wide sales of VOIs are driven by the number of guests attending a timeshare sale presentation (a "guest tour") and our ability to convert such guest tours into purchases of VOIs. The number of guest tours is driven by the number of existing owner guests Bluegreen has staying at a resort with a sales center, who agree to attend a sales presentation, and the number of new guest arrivals, the majority of which are utilizing a vacation package. During the three and six months endedJune 30, 2022 , we experienced increases in both the number of existing owner tours and the number of new guest tours, which contributed to an increase in the total number of guest tours by 13% and 23%, respectively, compared to three and six months endedJune 30, 2021 . The COVID-19 pandemic impacted the number of new guest tours during the 2021 periods, resulting in lower system-wide sales of VOIs. Included in system-wide sales are Fee-Based Sales and Bluegreen-owned sales. Sales by category are tracked based on which deeded VOI is conveyed in each transaction. The individual VOIs sold is based on several factors, including the needs of fee-based clients, the Company's debt service requirements and default resale requirements under term securitizations and similar transactions. These factors and business initiatives contribute to fluctuations in the amount of sales by category from period to period. Sales of VOIs. Sales of VOIs were$144.3 million and$91.8 million during the three months endedJune 30, 2022 and 2021, respectively, and$243.3 million and$147.7 million during the six months endedJune 30, 2022 and 2021, respectively. Sales of VOIs were impacted by the factors described in the discussion of system-wide sales of VOIs above and the proportion of Fee-Based VOI sales and the provision for loan losses. Gross sales of VOIs were reduced by$26.5 million and$18.5 million during the three months endedJune 30, 2022 and 2021, respectively, and$43.1 million and$30.8 million during the six months endedJune 30, 2022 and 2021, respectively, for the provision for loan losses. The provision for loan losses varies based on the amount of financed, non-fee based sales during the period and changes in estimates of future VOI notes receivable performance for existing and newly originated loans. The percentage of sales which were realized in cash within 30 days from sale was 43% and 45% during the three months endedJune 30, 2022 and 2021, respectively, and 43% and 45% during the six months endedJune 30, 2022 and 2021, respectively. The provision for loan losses as a percentage of gross sales of VOIs was 16% and 17% during the three months endedJune 30, 2022 and 2021, respectively, and 15% and 17% during the six months endedJune 30, 2022 and 2021, respectively. The decrease in the provision for loan loss as a percentage of sales during the 2022 periods as compared to the 2021 periods is due to lower than estimated 2022 defaults and higher than anticipated prepayments on the existing portfolio. We believe that the COVID-19 pandemic and general economic conditions including inflationary trends may have an impact on the collectability of our VOI notes receivable. The provision for loan losses is also impacted by defaults which Bluegreen believes are attributable to the receipt of letters from third parties and attorneys who purport to represent certain VOI owners and who have encouraged such owners to become delinquent and ultimately default on their obligations. See Note 9: Commitments and Contingencies to the Company's unaudited consolidated financial statements included in Item 1 of this report for additional information regarding such letters and actions we have taken in connection with such letters. The impact of general economic conditions, including continuation or worsening of supply chain constraints, labor shortages and inflationary trends, the COVID-19 pandemic, the continued impact of actions taken by timeshare exit firms are highly uncertain. There is no assurance that steps taken to mitigate the impact of these factors will be successful or that these matters will not impact the collectability of our VOI notes receivable to a greater extent than estimated. As a result, actual defaults may differ from our estimates and the allowance for loan losses may not prove to be adequate.
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The average annual default rates and delinquency rates (more than 30 days past due) on our VOI notes receivable were as follows:
For the Twelve Months Ended June 30,
2022 2021
Average annual default rates (1) 7.86% 9.73%
As of June 30,
2022 2021
Delinquency rates (1) 2.75% 2.56%
(1)The average annual default rates in the table above include VOIs which have
been defaulted but had not yet charged off due to the provisions of certain of
our receivable-backed notes payable transactions, as well as certain VOI loans
over 127 days past due where we received cease and desist letters from attorneys
and other third-party exit firms. Accordingly, these are excluded for purposes
of calculating the delinquency rates above.
The following table sets forth certain information for system-wide sales of VOIs
for the three and six months ended
For the Three Months Ended For the Six Months Ended
?June 30, ?June 30,
2022 2021 Change 2022 2021 Change
(dollars in thousands)
Number of sales centers open 24 24 - % 24 24 -
at period-end %
Total number of VOI sales 9,740 9,677 1 % 17,254 15,874 9
transactions %
Average sales price per 20,552 $ 17,004 21 % $ 20,410 $ 17,121 19 transaction
$ %
Number of total guest tours 66,376 58,533 13 % 115,237 93,354 23 %
Sale-to-tour conversion ratio- 14.7% 16.5% (180) bp 15.0% 17.0% (200) bp
total marketing guests
Number of existing owner guest 29,716 25,686 16 % 54,557 44,018 24
tours %
Sale-to-tour conversion ratio- 17.3% 20.0% (270) bp 17.0% 20.3% (330) bp
existing owners
Number of new guest tours 36,660 32,847 12 % 60,680 49,336 23 %
Sale-to-tour conversion ratio- 12.6% 13.8% (120) bp 13.1% 14.1% (100) bp
new guests
Percentage of sales to 53.6% 55.0% (140) bp 55.1% 58.4% (330)
existing owners bpAverage sales volume per guest $ 3,016 $ 2,811 7 % $
3,056 $ 2,911 5 %
Cost of VOIs Sold. During the three months ended June 30, 2022 and 2021, cost of
VOIs sold was $18.2 million and $7.0 million , respectively. Cost of VOIs sold
was $30.1 million and $12.2 million during the six months ended June 30, 2022
and 2021, respectively. Cost of VOIs sold was 13% and 8% during the three months
ended June 30, 2022 and 2021, respectively, and 12% and 8% during the six months
ended June 30, 2022 and 2021, respectively. Cost of VOIs sold as a percentage of
sales of VOIs varies between periods based on the relative costs of the specific
VOIs sold in each period and the size of the point packages of the VOIs sold
(due to offered volume discounts, including consideration of cumulative sales to
existing owners). Additionally, the effect of changes in estimates under the
relative sales value method, including estimates of sales, future defaults,
upgrades and incremental revenue from the resale of repossessed VOI inventory,
are accounted for as VOI inventory true-ups and retrospectively adjust the
margin previously recognized subject to those estimates. During the three and
six months ended June 30, 2022 , approximately $7.2 and $10.0 million ,
respectively, of cost of VOIs sold related to these true-ups. Cost of sales is
typically favorably impacted in periods where a significant amount of Secondary
Market VOI inventory is acquired or actual defaults and equity trades are higher
than anticipated and the resulting change in estimate is recognized. Cost of
VOIs sold as a percentage of sales of VOIs was higher for the three and six
months ended June 30, 2022 as compared to the three and six months ended June
30, 2021 primarily due to the relative mix of inventory being sold in the 2022
periods and timing of secondary market VOI purchases.
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Fee-Based Sales Commission Revenue. During the three months endedJune 30, 2022 and 2021, Bluegreen sold$27.8 million and$53.1 million , respectively, and during the six months endedJune 30, 2022 and 2021, Bluegreen sold$63.7 million and$91.9 million , respectively, of third-party VOI inventory under commission arrangements and earned sales and marketing commissions of$18.9 million and$35.6 million , respectively, during the three months endedJune 30, 2022 and 2021, and$42.9 million and$61.3 million during the six months endedJune 30, 2022 and 2021, respectively, in connection with those sales. The decrease in sales of third-party developer inventory on a commission basis during the 2022 periods was due to Bluegreen's increased focus on selling Bluegreen owned VOI sales. Bluegreen earned an average sales and marketing commission of 68% and 67% during the three months endedJune 30, 2022 and 2021, respectively, and 67% during both the six months endedJune 30, 2022 and 2021, which is net of a reserve for commission refunds in connection with early defaults and cancellations pursuant to the terms of certain fee-based service arrangements. Bluegreen typically recognizes a sales and marketing commission between 65% and 68% on sales of third-party VOI inventory. Financing Revenue, Net of Financing Expense - Sales of VOIs. Interest income on VOIs notes receivable was$23.4 million and$19.5 million during the three months endedJune 30, 2022 and 2021, respectively, which was partially offset by interest expense on receivable-backed debt of$4.1 million and$3.9 million , respectively. Interest income on VOIs notes receivable was$45.5 million and$38.7 million during the six months endedJune 30, 2022 and 2021, respectively, which was partially offset by interest expense on receivable-backed debt of$7.5 million and$8.1 million , respectively. The increase in finance revenue, net of finance expense in the 2022 periods as compared to the 2021 periods is primarily due to higher VOI notes receivable balances as a result of higher sales of VOIs and lower outstanding receivable-backed debt balances. Revenues from mortgage servicing during the three months endedJune 30, 2022 and 2021 were$1.2 million and$1.3 million , respectively, and$2.4 million and$2.6 million during the six months endedJune 30, 2022 and 2021, respectively, which are included in financing revenue, net of mortgage servicing expenses of$1.5 million and$1.1 million during the three months endedJune 30, 2022 and 2021, respectively, and$2.9 million and$2.3 million during the six months endedJune 30, 2022 and 2021, respectively. Revenues from mortgage servicing is expected to continue to decrease over time as the portfolio of serviced loans decreases due to normal amortization and a higher proportion of system-wide sales of VOIs are generated from Bluegreen owned VOI sales. Other Fee-Based Services - Title Operations, net. During the three months endedJune 30, 2022 and 2021, revenue from title operations was$3.4 million and$2.9 million , respectively, which was partially offset by expenses directly related to title operations of$1.0 million and$0.8 million , respectively. During the six months endedJune 30, 2022 and 2021, revenue from title operations was$6.5 million and$5.1 million , respectively, which was partially offset by expenses directly related to title operations of$1.9 million and$1.5 million , respectively. Resort title fee revenue varies based on VOI sales volumes as well as the title costs in the jurisdictions where the inventory being sold is located. The increase in the 2022 periods is due to the increase in system-wide sales of VOIs during each period compared to the 2021 periods, as described above. Net Carrying Cost of VOI Inventory. The gross carrying cost of VOI inventory was$10.7 million and$11.6 million during the three months endedJune 30, 2022 and 2021, respectively, which was partially offset by rental and sampler revenues of$6.7 million and$5.5 million , respectively. The gross carrying cost of VOI inventory was$20.9 million and$22.5 million during the six months endedJune 30, 2022 and 2021, respectively, which was partially offset by rental and sampler revenues of$12.9 million and$8.6 million , respectively. The decrease in net carrying costs of VOI inventory was primarily related to increased rentals of developer inventory and increased sampler stays, and to a lesser extent, lower maintenance fees and developer subsidies associated with the decrease in VOI inventory. In certain circumstances, marketing costs are offset by using inventory for marketing guest stays. Selling and Marketing Expenses. Selling and marketing expenses were$112.6 million and$87.1 million during the three months endedJune 30, 2022 and 2021, respectively, and$196.5 million and$145.1 million during the six months endedJune 30, 2022 and 2021, respectively. The increase in selling and marketing expenses during the 2022 periods compared to the 2021 periods is primarily attributable to increased variable costs such as commissions to sales personnel as a result of the increase in system-wide sales, increased expenses to fulfill more guest tours in the 2022 periods, and the cost of expanded marketing operations, including the expansion of marketing operations into oneBass Pro store and 15 additionalCabela's stores sinceJune 30, 2021 . We utilize our marketing operations at Bass Pro andCabela's stores to sell vacation packages to customers for future travel which require the customers to attend a timeshare presentation. Further, we have invested in various local and national marketing programs in an effort to
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attract new customers. These program changes may not be successful or generate a sufficient number of prospects to offset the program costs incurred. Bluegreen's vacation marketing programs resulted in the sale of 40,395 vacation packages during the second quarter of 2022. As compared to the second quarter of 2021, this reflects a decrease of approximately 28% in vacation package sales, which we believe is due primarily to the challenging labor market, which impacted staffing levels and turnover at our kiosks, the impact of inflation on consumer traffic in the retail operations in which we operate, as well as certain changes to our package program, which we began testing in the second quarter of 2022. As a percentage of system-wide sales of VOIs, selling and marketing expenses were 57% and 53% during the three months endedJune 30, 2022 and 2021, respectively, and 56% and 54%, respectively, during the six months endedJune 30, 2022 and 2021. The increase in selling and marketing expenses as a percentage of system-wide sales of VOIs reflects a higher proportion of VOI sales to new customers, which involve higher marketing cost than existing owners and the expansion of our sales and marketing operations. The following table sets forth certain new customer marketing information, excluding sampler and other returning owner vacation packages, for the three and six months endedJune 30, 2022 and 2021: For the Three Months Ended For the Six Months Ended ?June 30, ?June 30, 2022 2021 % Change 2022 2021 % Change Number ofBass Pro andCabela's marketing locations at period-end 128 112 14 128 112 14 Number of vacation packages outstanding, beginning of the period (1) 200,627 132,142 52 187,244 121,915 54 Number of vacation packages sold 40,395 56,256 (28) 82,385 105,630 (22) Number of vacation packages outstanding, end of the period (1) 184,782 163,738 13 184,782 163,738 13 % ofBass Pro vacation packages at period end 43% 51% (16) 43% 51% (16) % ofCabela's vacation packages at period end 18% 18% - 18% 18% - % of Choice Hotel vacation packages at period end 26% 21% 24 26% 21% 24 % of Other vacation packages at period end 13% 9% 44 13% 9% 44 (1)Excludes vacation packages sold to customers more than one year prior to the period presented and vacation packages sold to customers who had already toured but purchased an additional vacation package. In addition to vacation packages sold to new prospects, we also sell vacation packages to customers who have already toured, some of whom purchased a VOI, and have indicated they would tour again. As ofJune 30, 2022 , the pipeline of such packages was approximately 16,800. There is no assurance that such packages will convert to sales at historical or expected levels. General and Administrative Expenses - Sales and Marketing Operations. General and administrative expenses, representing expenses directly attributable to sales and marketing operations, were$14.0 million and$8.1 million during the three months endedJune 30, 2022 and 2021, respectively, and$23.9 million and$15.8 million during the six months endedJune 30, 2022 and 2021, respectively, primarily reflecting increased compensation costs and other related administrative costs due to higher sales of VOIs and the expansion of our sales and marketing support operations. As a percentage of system-wide sales of VOIs, general and administrative expenses directly attributable to sales and marketing operations were 7% and 5% during the three months endedJune 30, 2022 and 2021, and 7% and 6%, respectively, during the six months endedJune 30, 2022 and 2021, respectively.
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Resort Operations and Club Management
For the Three Months Ended For the Six Months Ended
?June 30, ?June 30,
(dollars in thousands) 2022 2021 2022 2021
Resort operations and club
management revenue $ 45,519 $ 43,131 $ 91,706 $ 86,362
Resort operations and club
management expense (24,780) (24,297) (50,600) (49,498)
Operating profit - resort
operations and club
?management 20,739 46% 18,834 44% 41,106 45% 36,864 43%
Add: Depreciation and
amortization 181 200 364 395
Adjusted EBITDA - resort
operations and
? club management $ 20,920 $ 19,034 $ 41,470 $ 37,259
Resort Operations and Club Management Revenue. Resort operations and club
management revenue increased 6% during both the three and six months ended
June 30, 2022 , as compared to the three and six months ended June 30, 2021 . Cost
reimbursement revenue, which consists of payroll and other operating expenses
which we incur and pass through to the HOAs, increased 4% and 6% during the
three and six months ended June 30, 2022 , respectively, as compared to the three
and six months ended June 30, 2021 . The increase in cost reimbursement revenue
was primarily attributable to an increase in headcount and higher wages.
Excluding cost reimbursement revenue, resort operations and club management
revenues increased 6% during both the three and six months ended June 30, 2022 ,
as compared to the three and six months ended June 30, 2021 primarily due to an
increase in management fees commensurate with higher resort operating costs. Our
resort network includes 68 Club and Club Associate Resorts as of both June 30,
2022 and 2021. We managed 49 resort properties as of both June 30, 2022 and
2021.
Resort Operations and Club Management Expense. During the three and six months
ended June 30, 2022 , resort operations and club management expense increased 2%
compared to three and six months ended June 30, 2021 . The increase was primarily
due to increased compensation costs incurred during the 2022 periods as a result
of higher staffing levels and a competitive labor market.
Bluegreen Corporate and Other
For the Three Months Ended For the Six Months Ended
?June 30, ?June 30,
(dollars in thousands) 2022 2021 2022 2021
General and administrative
expenses -
? corporate and other $ (21,652) $ (19,093) $ (46,453) $ (43,719)
Other (expense) income, net (99) 418 415 204
Loss (gain) on assets held for
sale 6 (12) (38) (37)
Add: Depreciation and
amortization 2,006 2,253 4,095 4,504
Add: Share-based compensation
and other 817 152 1,562 152
Adjusted EBITDA - Corporate and
other $ (18,922) $ (16,282) $
(40,419)
General and Administrative Expenses - Corporate and Other. General and administrative expenses directly attributable to corporate overhead were$21.7 million and$46.5 million during the three and six months endedJune 30, 2022 , respectively, compared to$19.1 million and$43.7 million during the three and six months endedJune 30, 2021 , respectively. The increases were primarily due to higher compensation and benefits, higher legal expenses, and higher IT costs during the 2022 periods as compared to the 2021 periods. Other (Expense) Income, net. Other (expense) income, net was$(0.1) million and$0.4 million during the three and six months endedJune 30, 2022 , respectively, compared to$0.4 million and$0.2 million during the three and six months endedJune 30, 2021 , respectively.
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Interest Expense. Interest expense unrelated to receivable-backed debt was$4.7 million and$7.5 million during the three and six months endedJune 30, 2022 , respectively, compared to$3.2 million and$6.9 million during the three and six months endedJune 30, 2021 , respectively. The increases in such interest expense during the three and six months endedJune 30, 2022 were primarily due to the higher weighted-average cost of borrowing, as compared to the three and six months endedJune 30, 2021 . The weighted average cost of borrowing excluding receivable-backed debt as ofJune 30, 2022 was approximately 5.6% compared to approximately 4.9% as ofJune 30, 2021 . Net Income Attributable to Non-Controlling Interest. The Company includes in its consolidated financial statements the results of operations and financial condition ofBluegreen/Big Cedar Vacations , Bluegreen's 51%-owned subsidiary. Net income attributable to non-controlling interest is the portion ofBluegreen/Big Cedar Vacations that is attributable toBig Cedar LLC , which holds the remaining 49% interest inBluegreen/Big Cedar Vacations . Net income attributable to noncontrolling interests during the three and six months endedJune 30, 2022 was$4.1 million and$7.3 million , respectively, compared to$4.4 million and$6.9 million during the three and six months endedJune 30, 2021 , respectively. The increase in net income attributable to noncontrolling interests for the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 reflects higher sales of VOIs and operating profit atBluegreen/Big Cedar Vacations . BVH Corporate and Other BVH Corporate and other in the Company's segment information primarily includes the following: ?BVH's corporate general and administrative expenses; ?Interest expense associated with Woodbridge's junior subordinated debentures and its outstanding note payable to BBX Capital; and ?Interest income on interest-bearing cash accounts. Corporate General and Administrative Expenses BVH's corporate general and administrative expenses for the three and six months endedJune 30, 2022 were$0.6 million and$1.1 million , respectively, compared to$0.6 million and$1.4 million during the three and six months endedJune 30, 2021 , respectively, and consist primarily of costs associated with BVH being a publicly traded company (including, but not limited to, executive compensation, shareholder relations, and legal and audit expenses). Interest Expense BVH's interest expense for the three and six months endedJune 30, 2022 was$1.6 million and$3.1 million , respectively, compared to$1.8 million and$3.6 million during the three and six months endedJune 30, 2021 , respectively. Interest expense includes$0.8 million and$1.5 million , for the three and six months endedJune 30, 2022 , respectively, and$1.5 million and$2.3 million during the three and six months endedJune 30, 2021 , respectively, of interest expense on the note payable to BBX Capital issued in connection with the spin-off of BBX Capital inSeptember 2020 . The decrease in interest expense was primarily due to the$25.0 million repayment of the note to BBX Capital inDecember 2021 . Provision for Income Taxes from Continuing Operations The provision for income taxes was$6.2 million and$12.4 million for the three and six months endedJune 30, 2022 , respectively, compared to$7.7 million and$8.9 million during the three and six months endedJune 30, 2021 , respectively. The Company's effective income tax rate was approximately 26% and 28% during the three months endedJune 30, 2022 and 2021, respectively, 27% and 28% during the six months endedJune 30, 2022 and 2021, respectively.
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Changes in Financial Condition
The following table summarizes the Company's cash flows for the periods
indicated (in thousands)
For the Six Months Ended
?June 30,
2022 2021
Net cash provided by operating activities $ 68,924 $ 53,269
Net cash used in investing activities (7,867)
(8,229)
Net cash provided by (used in) financing activities 20,185
(39,381)
Net increase in cash, cash equivalents, and restricted cash$ 81,242 $
5,659
Cash Flows from Operating Activities The Company's operating cash flow increased$15.6 million during the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 , primarily reflecting the following: ?increased operating profit in the 2022 period reflecting the stronger 2022 performance and continued recovery from the COVID-19 pandemic; ?timing of the payment of certain 2022 expenses, including those toBass Pro , made inDecember 2021 ; and ?decreased cash paid for income taxes; ?partially offset by an increase in our VOI notes receivable portfolio. Cash Flows from Investing Activities Cash used in investing activities was$7.9 million and$8.2 million during the six months endedJune 30, 2022 and 2021, respectively, and consisted of spending on purchases of property and equipment. Cash Flows from Financing Activities Cash provided by financing activities increased$59.6 million during the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 , primarily due to a$92.8 million increase in net borrowings in the 2022 period primarily due to the 2022 Term Securitization, partially offset by$30.8 million of repurchases of shares of our Class A common stock in the 2022 period with no such repurchases in the 2021 period and$3.1 million of dividends paid during the 2022 period with no such dividends in the 2021 period. For additional information on the availability of cash from existing credit facilities, as well as repayment obligations, see "Liquidity and Capital Resources" below.
Seasonality
The Company has historically experienced, and expects to continue to experience, seasonal fluctuations in its revenues and results of operations. This seasonality has resulted, and may continue to result, in fluctuations in quarterly operating results. Due to consumer travel patterns, we typically experience more tours and higher VOI sales volume during the second and third quarters. Liquidity and Capital ResourcesBVH Parent Company The Company, at its parent company level, is a holding company with limited operations. It currently expects to incur approximately$2.0 million annually in executive compensation expenses and public company costs and annual interest expense of approximately$6.0 million associated with Woodbridge's junior subordinated debentures and the note payable to BBX Capital, each as described below. These amounts are based on current expectations and assumptions, currently available information and, with respect to interest expense on Woodbridge's junior
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subordinated debentures, interest rates as ofJune 30, 2022 . Such assumptions and expectations may not prove to be accurate, interest rates may increase and, accordingly or otherwise, actual expenses may exceed the amounts expected. As ofJune 30, 2022 , the Company, excluding its subsidiaries, had cash, cash equivalents, and short-term investments of approximately$4.4 million . Its primary source of liquidity for the foreseeable future is expected to be its available cash, cash equivalents, and short-term investments and distributions from Bluegreen. BVH is dependent on the payment of distributions from Bluegreen to fund its operations and debt service requirements in future periods. There is no assurance that Bluegreen will pay distributions in the amounts required to fund BVH's needs or at all. In connection with the spin-off of BBX Capital inSeptember 2020 , BVH issued a$75.0 million note payable to BBX Capital that accrues interest at a rate of 6% per annum and requires payments of interest on a quarterly basis. Under the terms of the note, BVH has the option in its discretion to defer interest payments under the note, with interest on the entire outstanding balance thereafter to accrue at a cumulative, compounded rate of 8% per annum until such time as all accrued payments under the note are brought current, including deferred interest. InDecember 2021 , BVH repaid$25.0 million on the note payable to BBX Capital, leaving a remaining balance as ofJune 30, 2022 of$50.0 million . All outstanding amounts under the note will become due and payable inSeptember 2025 or earlier upon certain other events. The Company's wholly owned subsidiary, Woodbridge, had$65.3 million of junior subordinated debentures outstanding as ofJune 30, 2022 . Woodbridge's junior subordinated debentures accrue interest at a rate of 3-month LIBOR plus a spread ranging from 4.80% to 5.09%, mature between 2035 and 2036, and require interest payments on a quarterly basis. Except as otherwise noted, the debts and obligations of Bluegreen are not direct obligations of BVH and generally are non-recourse to BVH. Similarly, the assets of Bluegreen are not available to BVH absent a distribution. Furthermore, certain of Bluegreen's credit facilities contain terms which could limit the payment of distributions without the lender's consent or waiver. BVH may also seek additional liquidity in the future from outside sources, including traditional bank financing, secured or unsecured indebtedness, or the issuance of equity and/or debt securities. However, these alternatives may not be available to BVH on attractive terms, or at all. The inability to raise funds through such sources when or to the extent needed would have a material adverse effect on the Company's business, results of operations, and financial condition. InAugust 2021 , the Company's board of directors approved a share repurchase program which authorized the repurchase of the Company's Class A Common Stock and Class B Common Stock at an aggregate cost of up to$40.0 million . InMarch 2022 , the Company's board of directors approved a$50.0 million increase in the aggregate cost of the Company's Class A Common Stock and Class B Common Stock that may be repurchased under the program. The Company repurchased and retired 1,068,622 of Class A Common Stock during the six months endedJune 30, 2022 for an aggregate purchase price of$30.8 million . As ofJune 30, 2022 ,$32 million remained available for the repurchase of shares under the Company's share repurchase program. InJuly 2022 , the Company repurchased and retired 843,358 of Class A Common Stock for$23.6 million in a private transaction. No shares were repurchased during the six months endedJune 30, 2021 . The Company paid a quarterly cash dividend on its Class A and ClassB Common Stock of$0.15 per share during the second quarter of 2022 which totaled$3.1 million in the aggregate. OnJuly 20, 2022 , the Company's board of directors declared a quarterly cash dividend of$0.15 per share on its Class A and Class B Common Stock, which totaled$2.8 million in the aggregate, to shareholders of record onAugust 8, 2022 , to be paid onAugust 22, 2022 . The Company did not pay any dividends during 2021. Bluegreen Bluegreen believes that it has sufficient liquidity from the sources described below to fund its operations, including its anticipated working capital, capital expenditure, and debt service requirements for the foreseeable future, subject to the success of its operations and initiatives and the ongoing availability of credit.
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Bluegreen's primary sources of funds from internal operations are: (i) cash sales; (ii) down payments on VOI sales which are financed; (iii) proceeds from borrowings collateralized by notes receivable; (iv) cash from finance operations; and (v) net cash generated from sales and marketing fee-based services and other fee-based services, including resort management operations. The ability to borrow against notes receivable from VOI buyers has been important to Bluegreen's continued liquidity. A financed VOI buyer is generally only required to pay a minimum of 10% of the purchase price in cash at the time of sale; however, selling, marketing and administrative expenses attributable to the sale are primarily cash expenses that generally exceed a buyer's minimum required down payment. Accordingly, having financing facilities available to borrow against Bluegreen's VOI notes receivable has been important to its ability to meet its short and long-term cash needs. Bluegreen has attempted to maintain a number of diverse financing facilities. Historically, Bluegreen has relied on the term securitization market in order to generate liquidity and create capacity in its receivable facilities. In addition, maintaining adequate VOI inventory to sell and pursue growth into new markets requires Bluegreen to use cash on hand or incur debt for the acquisition, construction and development of new resorts. Development expenditures for the remainder of 2022, including potential acquisitions of new resorts, are expected to range between$125.0 million and$150.0 million and include development activity at resorts inMissouri andTennessee . There is no assurance that any of Bluegreen's potential acquisitions of new resorts will be completed. Bluegreen continues to pursue opportunities for new resort or land acquisitions. As described above, Bluegreen's ability to borrow against its VOI notes receivable has historically been a significant source of liquidity. If Bluegreen is unable to renew credit facilities or obtain new credit facilities, Bluegreen's business, results of operations, liquidity, or financial condition would be materially, adversely impacted. Bluegreen has entered into agreements with third-party developers that allow Bluegreen to buy VOI inventory, typically on a non-committed basis, prior to when it intends to sell such VOIs. Bluegreen also enters into secondary market arrangements with certain HOAs and others typically on a non-committed basis, which allows Bluegreen to acquire VOIs generally at a significant discount, as such VOIs are typically obtained by the HOAs through foreclosure in connection with maintenance fee defaults. Acquisition of JIT and secondary market inventory, both of which are considered Bluegreen-owned inventory, is expected to range between$10.0 million and$20.0 million in 2022. InApril 2022 , Bluegreen completed a private offering and sale of$172.0 million of VOI receivable-backed notes (the "2022 Term Securitization"). The 2022 Term Securitization consisted of the issuance of three tranches of VOI receivable-backed notes (collectively, the "Notes") as follows:$71.0 million of Class A Notes,$56.5 million of ClassB Notes , and$44.5 million of ClassC Notes . The interest rates on the Class A Notes, ClassB Notes and ClassC Notes are 4.12%, 4.61% and 5.35%, respectively, which blends to an overall weighted average note interest rate of approximately 4.60%. The gross advance rate for this transaction was 88.3%. The Notes mature inSeptember 2037 . Approximately$194.7 million of VOI receivables were sold toBXG Receivables Note Trust 2022-A (the "Trust") in the transaction. The gross proceeds of such sales to the Trust were$171.9 million . A portion of the proceeds received at the closing were used to: repay$53.2 million under theKey Bank /DZ Purchase Facility, representing all amounts outstanding under the facility at that time; repay$11.0 million under the Liberty Bank Facility; repay$16.1 million under the Pacific Western Bank Facility; capitalize a reserve fund; and pay fees and expenses associated with the transaction. Prior to the closing of the 2022 Term Securitization, Bluegreen, as servicer, funded$4.9 million in connection with the servicer redemption of the notes related to the 2013 Term Securitization, as described above, and certain of the VOI notes in such trust were sold to the Trust in connection with the 2022 Term Securitization. The remainder of the gross proceeds from the 2022 Term Securitization were used for general corporate purposes. Subject to performance of the collateral, Bluegreen will receive any excess cash flows generated by the receivables transferred under the 2022 Term Securitization (excess meaning after payments of customary fees, interest and principal under the 2022 Term Securitization) on a pro-rata basis as borrowers make payments on their VOI loans. While ownership of the VOI receivables included in the 2022 Term Securitization is transferred and sold for legal purposes, the transfer of these receivables is accounted for as a secured borrowing for financial accounting purposes. Accordingly, no gain or loss was recognized as a result of this transaction.
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Bluegreen has$12.7 million of required contractual obligations due to be paid within one year, as well as two financing facilities with advance periods that will expire within one year. While there is no assurance that Bluegreen will be successful, Bluegreen intends to seek to renew or extend its debt and extend its advance periods on certain facilities. Bluegreen's level of debt and debt service requirements have several important effects on its operations and in turn on the Company, including that: (i) significant debt service cash requirements reduce the funds available for operations and future business opportunities and increase Bluegreen's vulnerability to adverse economic and industry conditions, as well as conditions in the credit markets, generally; (ii) Bluegreen's leverage position increases its vulnerability to economic and competitive pressures; (iii) the financial covenants and other restrictions contained in indentures, credit agreements and other agreements relating to its indebtedness require Bluegreen to meet certain financial tests and may restrict Bluegreen's ability to, among other things, pay dividends, borrow additional funds, dispose of assets or make investments; and (iv) Bluegreen's leverage position may limit funds available for acquisitions, working capital, capital expenditures, dividends and other general corporate purposes. Certain of Bluegreen's competitors may operate on a less leveraged basis and may have greater operating and financial flexibility than Bluegreen does. Credit Facilities for Receivables with Future Availability Bluegreen maintains various credit facilities with financial institutions which allow Bluegreen to borrow against or sell its VOI notes receivable. As ofJune 30, 2022 , Bluegreen had the following credit facilities with future availability, in each case, subject to the terms and conditions of the applicable facility (dollars in thousands): Advance Period ?Expiration; Borrowing ?Borrowing ?Limit as Outstanding Availability ?Maturity as of ?Balance as of ?as of of Borrowing Rate; ?June 30, ?June 30, ? June 30, ?June 30, ?Rate as of 2022 ?2022 ?2022 2022 ?June 30, 2022 Liberty Bank$ 40,000 $ 10,825 $ 29,175 June 2024; Prime - 0.50%; Facility June 2026 ?floor of 3.00%(1) NBA September 30 day LIBOR+2.25%; Receivables 70,000 21,159 48,841 2023; March ? floor of 3.00%; 3.92% Facility 2028 (2) Pacific
September
Western 50,000 3,666 46,334 2024; 30 day LIBOR+2.50% to
Facility September 2.75%(3); 4.42%
2027
KeyBank/DZ December 30 day LIBOR or CP +2.25%;
Purchase 80,000 - 80,000 2022; interest rate floor of
Facility December 2024 0.25% (4)
Quorum December
Purchase 50,000 16,313 33,687 2022; (5)
Facility December 2034
$ 290,000 $ 51,963 $ 238,037
(1)Recourse is limited to $5.0 million , subject to certain exceptions.
(2)Borrowings accrue interest at one-month LIBOR plus 2.25% (with an interest
rate floor of 3.00%). Recourse to Bluegreen/Big Cedar Vacations is limited to
$10.0 million , subject to certain exceptions.
(3)Recourse is limited to $7.5 million , subject to certain exceptions.
(4)Borrowings accrue interest at a rate equal to either LIBOR, a "Cost of Funds"
rate or commercial paper ("CP") rates plus 2.25%. The
interest rate will increase to the applicable rate plus 3.25% upon the
expiration of the advance period.
(5)Of the amounts outstanding under the Quorum Purchase Facility at June 30,
2022 , $8.8 million accrues interest at a rate per
annum of 4.95%, and $7.5 million accrues interest at a fixed rate of 5.10%.
See Note 10 to the Company's Consolidated Financial Statements included in its
Annual Report on Form 10-K for the year ended December 31, 2021 for additional
information with respect to Bluegreen's receivable-backed notes payable
facilities.
Other Credit Facilities
Fifth Third Syndicated Line-of-Credit and Fifth Third Syndicated Term Loan.
Bluegreen's has a corporate credit facility which included a $100.0 million term
loan (the "Fifth Third Syndicated Loan") with quarterly amortization
requirements and a $125.0 million revolving line of credit (the "Fifth Third
Syndicated Line-of-Credit") as of December 31, 2021 . In February 2022 , Bluegreen
amended the facility, which included a $75.0 million increase to
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the revolving line. Borrowings generally bear interest at a rate of term SOFR plus 1.75-2.50% and a 0.05%-0.10% credit spread adjustment, depending on Bluegreen's leverage ratio. Borrowings are collateralized by certain VOI inventory, sales center buildings, management fees, short-term receivables and cash flows from residual interests relating to certain term securitizations. As ofJune 30, 2022 , outstanding borrowings under the facility totaled$118.8 million , including$98.8 million under the Fifth Third Syndicated Term Loan with an interest rate of 3.33%, and$20.0 million under the Fifth Third Syndicated Line of Credit with an interest rate of 3.31%. Bluegreen also has outstanding obligations under various credit facilities and securitizations that have no remaining future availability as the advance periods have expired. Commitments The following table summarizes the contractual minimum principal and interest payments required on all of the Company's outstanding debt and non-cancelable operating leases by period due date, as ofJune 30, 2022 (in thousands): Payments Due by Period Unamortized Less than 1 - 3 4 - 5 After 5 ? Debt Issuance Contractual Obligations ?1 year ?Years ?Years ?Years ?Costs Total Receivable-backed notes payable $ -$ 3,174 $ 21,886 $ 379,567 $ (6,103)$ 398,524 Bluegreen notes payable 5,000 10,000 103,750 - (1,213) 117,537 and other borrowings BVH note payable to BBX - - 50,000 - - 50,000 Capital, Inc. Jr. subordinated debentures (1) - - - 170,897 (971) 169,926
Noncancelable operating 7,655 10,150 5,547 22,908
-
leases (2) 46,260
Bass Pro Settlement (3) 4,000 4,000 - - - 8,000
Contractual interest (4) 32,103 63,695 57,774 205,291
- 358,863
Total contractual
obligations $ 48,758 $ 91,019 $ 238,957 $ 778,663 $ (8,287) $ 1,149,110
(1)Amounts do not include purchase accounting adjustments for junior
subordinated debentures of $34.5 million .
(2)Amounts represent the cash payment for leases and include interest of $10.3
million .
(3)Amounts represent the $4.0 million annual cash payments to Bass Pro during
each of 2023 and 2024 pursuant to the June 2019 settlement agreement and include
imputed interest of $0.4 million .
(4)Assumes that the scheduled minimum principal payments are made in accordance
with the table above and the interest rate on variable rate debt remains the
same as the rate at June 30, 2022 .
The future commitments of BVH relate to Woodbridge's junior subordinated
debentures and the note payable to BBX Capital, including interest thereon. The
Company will rely primarily on cash on hand and cash equivalents, as well as
dividends, if any, that may be paid by Bluegreen in the future, in order to
satisfy the principal payments required on its contractual obligations. As
discussed above, while the Company believes that it will have sufficient cash
and cash equivalents to fund its operations for the foreseeable future, it will
be dependent on the payment of distribution by Bluegreen to fund its operations
in future periods. There is no assurance that Bluegreen will pay distributions
in amounts required to fund BVH's needs or at all.
In lieu of paying maintenance fees for unsold VOI inventory, Bluegreen may enter
into subsidy agreements with certain HOAs. During the six months ended June 30,
2022 and 2021, Bluegreen made payments related to such subsidies of $5.7 million
and $4.7 million , respectively, which are included within cost of other
fee-based services in the Company's unaudited consolidated statements of
operations and comprehensive income. As of June 30, 2022 , Bluegreen had $7.6
million accrued for such subsidies, which is included in accrued liabilities and
other in the unaudited consolidated balance sheet as of such date. As of
December 31, 2021 , Bluegreen had no accrued liabilities for such subsidies.
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Bluegreen intends to use cash on hand and cash flow from operations, including cash received from the sale or pledge of VOI notes receivable, and cash received from new borrowings under existing or future credit facilities in order to satisfy the principal and interest payments required on contractual obligations. Bluegreen believes that its existing cash, anticipated cash generated from operations, anticipated future permitted borrowings under existing or future credit facilities, and anticipated future sales of notes receivable under existing, future or replacement purchase facilities will be sufficient to meet its anticipated working capital, capital expenditure and debt service requirements, including the contractual payment of the Bluegreen obligations set forth above, for the foreseeable future subject to the success of its ongoing business strategies, the ongoing availability of credit and the impact of general economic conditions, including supply chain constraints, labor shortages and inflation, and the COVID-19 pandemic. Bluegreen will continue its efforts to renew, extend or replace any credit and receivables purchase facilities that have expired or that will expire in the near term. Bluegreen may, in the future, also obtain additional credit facilities and may issue corporate debt. Any debt incurred or issued may be secured or unsecured, bear interest at fixed or variable rates and may be subject to such terms as the lender may require and management believes acceptable. There can be no assurance that Bluegreen's efforts to renew or replace credit facilities or receivables purchase facilities which have expired or which are scheduled to expire in the near term will be successful or that sufficient funds will be available from operations or under existing, proposed or future revolving credit or other borrowing arrangements or receivables purchase facilities to meet Bluegreen's cash needs, including debt service obligations. To the extent Bluegreen is unable to sell notes receivable or borrow under such facilities, its ability to satisfy its obligations would be materially adversely affected. Bluegreen's receivables purchase facilities, credit facilities, indentures and other outstanding debt instruments include what Bluegreen believes to be customary conditions to funding, eligibility requirements for collateral, cross-default and other acceleration provisions and certain financial and other affirmative and negative covenants, including, among others, limits on the incurrence of indebtedness, payment of dividends, investments in joint ventures and other restricted payments, the incurrence of liens and transactions with affiliates, as well as covenants concerning net worth, fixed charge coverage requirements, debt-to-equity ratios, portfolio performance requirements and cash balances, and events of default or termination. In the future, Bluegreen may be required to seek waivers of such covenants, but may not be successful in obtaining waivers, and such covenants may limit its ability to raise funds, sell receivables or satisfy or refinance its obligations, or otherwise adversely affect its financial condition and results of operations, as well as its ability to pay distributions. Bluegreen's future operating performance and ability to meet its financial obligations will be subject to future economic conditions and to financial, business and other factors, many of which may be beyond its control. As previously disclosed, Bluegreen entered into a settlement agreement and revised marketing arrangement withBass Pro and its affiliates duringJune 2019 . Pursuant to the Settlement Agreement, Bluegreen agreed to make five annual payments toBass Pro of$4.0 million , which commenced inJanuary 2020 . Additionally, in lieu of the previous commission arrangement, Bluegreen agreed to pay toBass Pro a fixed annual fee for eachBass Pro andCabela's retail store that Bluegreen accessed and an amount per net vacation package sold. As ofJune 30, 2022 , Bluegreen had sales and marketing operations at a total of 128Bass Pro Shops andCabela's Stores. InDecember 2021 , Bluegreen paid Bass Pro$8.3 million in payment of the 2022 fixed fee, of which$4.2 million was unamortized as ofJune 30, 2022 and is included in prepaid expenses in the Company's unaudited consolidated balance sheet. Off-balance-sheet Arrangements As ofJune 30, 2022 , the Company did not have any "off-balance sheet" arrangements.
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